Successful Defense for SDVO Small Business

Client Type: Private Company

The Government Contracts team successfully defended a service-disabled, veteran-owned small business (SDVOSB) in a size appeal filed at the SBA’s Office of Hearings and Appeals (OHA). BES Design/Build, a VA certified SDVOSB, was the successful awardee of a contract issued by the Department of Veterans Affairs to upgrade fire sprinkler systems at the VA Medical Center in Memphis, Tennessee. A disappointed bidder protested the award, arguing that BES was not a small business under the $14 million size standard for the procurement at issue.

In its protest, the disappointed bidder argued that BES was affiliated with several other companies, and the combined revenue of all BES affiliates exceeded the procurement’s $14 million size standard. The protester alleged that BES shared common management with another company by virtue of a mentor-protégé agreement, and with additional companies owned by BES’s minority member. In response, BES presented evidence to the SBA showing that the majority owner of BES was a service-disabled veteran in complete control of the company. Further, BES certified that its majority owner did not have any management authority in any of the alleged affiliates.

The SBA area office determined that because no other individual or company could control BES, and BES did not have control over any other company, there was no affiliation to be found. Thus, the SBA determined that BES was a small business and denied the protest. Unsatisfied, the disappointed bidder filed an appeal with OHA challenging the SBA size determination. In its appeal, the disappointed bidder made additional allegations of affiliation not raised in the original protest.

We argued against the inclusion of the new allegations, on the basis that protesters are not permitted to introduce new grounds of protest in an appeal. In addition, we argued that even if the new affiliation allegations were properly raised, the evidence clearly showed that BES was not affiliated with any of the companies alleged as affiliates by the protester. OHA agreed, and denied the appeal. As a result, BES maintained its SDVOSB status and the VA was able to move forward with the award to BES.

The Government Contracts team successfully defended a service-disabled, veteran-owned small business (SDVOSB) in a size appeal filed at the SBA’s Office of Hearings and Appeals (OHA). BES Design/Build, a VA certified SDVOSB, was the successful awardee of a contract issued by the Department of Veterans Affairs to upgrade fire sprinkler systems at the VA Medical Center in Memphis, Tennessee. A disappointed bidder protested the award, arguing that BES was not a small business under the $14 million size standard for the procurement at issue.

In its protest, the disappointed bidder argued that BES was affiliated with several other companies, and the combined revenue of all BES affiliates exceeded the procurement’s $14 million size standard. The protester alleged that BES shared common management with another company by virtue of a mentor-protégé agreement, and with additional companies owned by BES’s minority member. In response, BES presented evidence to the SBA showing that the majority owner of BES was a service-disabled veteran in complete control of the company. Further, BES certified that its majority owner did not have any management authority in any of the alleged affiliates.

The SBA area office determined that because no other individual or company could control BES, and BES did not have control over any other company, there was no affiliation to be found. Thus, the SBA determined that BES was a small business and denied the protest. Unsatisfied, the disappointed bidder filed an appeal with OHA challenging the SBA size determination. In its appeal, the disappointed bidder made additional allegations of affiliation not raised in the original protest.

We argued against the inclusion of the new allegations, on the basis that protesters are not permitted to introduce new grounds of protest in an appeal. In addition, we argued that even if the new affiliation allegations were properly raised, the evidence clearly showed that BES was not affiliated with any of the companies alleged as affiliates by the protester. OHA agreed, and denied the appeal. As a result, BES maintained its SDVOSB status and the VA was able to move forward with the award to BES.